Viewpoint
By Don Copenhaver, President

Suggested elimination of Capper-Volstead would cripple modern agriculture

With recent developments in Washington, the legislative committee of MFA’s corporate board of directors and I will spend a lot of time with our congressional representatives this month. That’s because a federal commission has recommended gutting a 1920s act that underpins modern cooperatives. As background let me explain that in 1922, Congress passed the Capper-Volstead Act, which gave farmers and ranchers the legal right to join together in cooperative associations for their mutual benefit. The act gives farmers and agricultural producer organizations limited antitrust immunity in processing, preparing for market, handling and marketing their products. The act provides limited antitrust immunity to farmers for forming cooperatives. It also permits such organizations to have marketing agencies in common.

Protections provided by the Capper-Volstead Act are essential to the economic well-being of farmers and ranchers in today’s economy. Without limited antitrust immunity for cooperatives, family farmers would not be able to compete in a business economy in which farmers lack bargaining power in dealing with relatively few, large buyers.

Despite this, the Antitrust Modernization Commission, a 12-member federal commission recommended:

• all immunities and exemptions from the antitrust laws should be disfavored;
• all immunities and exemptions should be subject to sunset provisions;
• the Federal Trade Commission should be authorized to study the competitive effects of and justifications for immunities and exemptions;
• courts should construe all immunities and exemptions narrowly and against the beneficiary; and
• only narrow immunities with procedural safeguards should be granted by Congress.

The commission’s intentions may be good. Certainly, laws should be examined to ensure they are not outdated or ineffective. But these recommendations fly in the face of modern agriculture and the tremendously successful impact of Capper-Volstead.

In fact, the commission refused to hear from the National Council of Farmer Cooperatives prior to issuing its ruling. NCFC submitted comments to the commission in support of Capper-Volstead and requested the opportunity to testify. The commission denied that request, saying it did not want to hear from the affected industries.

MFA belongs to NCFC as do most major agricultural cooperatives in the United States. It’s a worthwhile organization that exists for just such reasons as exemplified by this out-of-touch commission. Someone has to represent modern agriculture in Washington.

According to NCFC, there has been tremendous turnover on both the House and Senate agriculture committees. All of us in agriculture need to make sure those committees are familiar with the Capper-Volstead Act, as well as the Sherman Act and other antitrust laws. As you know, farmers and ranchers have a long and proud history of using cooperatives to market what they produce. Think MFA, FCS Financial, Dairy Farmers of America, Land O’ Lakes, Sunkist Growers, etc.

For 100 years this nation has recognized the need for farmers to join together and has expressed its intent to promote associations of producers through the Clayton Act, the Capper-Volstead Act, the Agricultural Marketing Act and the Agricultural Marketing Agreement Act of 1937, among other statutes, including the Farm Bill.

Across the United States, cooperatives process and market almost every type of agricultural commodity, furnish farm supplies, and provide credit and related financial services to their members. Earnings from these activities are returned to their farmer members on a patronage basis.

Farmer cooperatives are the premier vehicles that enable farmers to compete effectively in a global marketplace. They give farmers the chance to capitalize on new market opportunities, including entry into agricultural processing, thereby increasing competition and access to competitive markets.

There is no need to repeal or sunset the limited immunities provided in the Capper-Volstead Act. The act is subject to administration and enforcement by USDA and the Department of Justice. It includes protections for consumers, and Congress has ongoing oversight responsibility. Repeal or sunset would cause great economic harm and uncertainty for farmers and their cooperatives. It would adversely impact individuals and entities that do business with farmer cooperatives as well as rural communities. Finally, such action would serve to reduce competition and access to markets.

In view of all the above, the commission might not have wanted to hear from NCFC and the cooperatives it represents prior to its decision, but I can promise that the commission will hear a whole lot now. A change to Capper-Volstead or other agricultural immunities and exemptions would require action by Congress. It is up to all of us to see that our senators and representatives hear our concerns. Please join me in contacting them.

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